Editor’s note: This market commentary was originally shared with RollingWave Capital subscribers in early September 2026. Market conditions and opinions reflect the time it was written and are subject to change.
One of the hardest decisions in investing is knowing when to sell a winning stock. After a position rises 25%, 50%, or even 100%, taking the gain can feel like the responsible thing to do.
But a higher stock price does not, by itself, mean an investment no longer deserves a place in the portfolio. Sometimes the business—and the investment thesis—is stronger after the stock has doubled than it was when the position was first purchased.
The better question is not, “How much have we made?” It is:
Would we still want to own this company at today’s price?
Why Investors Sell Winners Too Early
Peter Lynch once described selling successful investments too soon as one of the biggest mistakes of his investing career.
In 1989, Warren Buffett called Lynch after reading One Up on Wall Street. Buffett wanted permission to use one of the book’s most memorable lines in Berkshire Hathaway’s year-end report:
“Selling your winners and holding your losers is like cutting the flowers and watering the weeds.”
Peter Lynch, One Up on Wall Street
Lynch later joked that Buffett had selected the line that highlighted one of Lynch’s own greatest weaknesses as an investor: he sold some of his winners too early.
There is an important lesson in that, particularly when markets are near record highs and uncertainty is everywhere.
Do Not Penalize Yourself for Buying at a Good Price
Historically, the U.S. stock market has delivered attractive long-term returns, although actual results vary widely from year to year. Against that backdrop, a large gain in one stock can feel abnormal—or temporary.
If a stock purchased at $50 rises to $100, however, the original purchase price does not make $100 the wrong price at which to continue owning it. A stock does not know what an investor paid for it.
Over the same period, the company may have:
- grown revenue and earnings;
- gained market share;
- successfully introduced a new product;
- expanded its addressable market; or
- reduced uncertainty around its long-term opportunity.
Selling only because the position has made “too much money” can amount to penalizing ourselves for getting the original investment right.
Market Update: Strong Earnings Meet Persistent Headwinds
At the time of writing, investors had no shortage of reasons for caution. Conflict in the Middle East, higher oil and gasoline prices, inflation above the Federal Reserve’s target, elevated bond yields, and renewed discussion of additional rate increases all weighed on the outlook.
Yet the stock market remained near all-time highs.
The natural question was: How can the market be this high with everything going on?
I would ask a different one:
How much higher might it be without all of these headwinds?
Corporate earnings continued to improve despite those challenges. That distinction matters. Stocks were not rising solely because investors had chosen to ignore war, inflation, oil prices, or interest rates. The market’s fundamental underpinning—corporate profitability—continued to show resilience.
Eventually, some headwinds pass. Wars end. Oil prices fluctuate. Inflation moderates. Interest-rate cycles change.
None of this means stocks cannot decline next week, next month, or for an extended period. They can. But when businesses continue growing through a difficult environment, the eventual removal of those pressures can become an additional tailwind.
Instead of asking only why the market has not fallen because of everything going wrong, it is worth considering what the market could look like when fewer things are going wrong.
When Should You Sell a Winning Stock?
RollingWave Capital is not opposed to selling. We simply do not believe “the stock went up a lot” is a sufficient reason on its own.
There are practical reasons to sell. Investors eventually need their capital to fund spending, major purchases, charitable gifts, retirement income, or other goals. The purpose of accumulating wealth is ultimately to use some of it.
Outside of raising cash for a client’s needs, our sell decisions generally fall into three categories.
1. The Fundamental Investment Thesis Has Changed
This is the most important reason to sell.
The business may no longer be performing as expected. The competitive landscape may have deteriorated. Management may have changed course, or new information may have materially altered the original thesis.
For established mid- and large-cap companies, those changes may occur less frequently than daily market commentary suggests. Great businesses can remain great businesses for long stretches of time—but they still require ongoing scrutiny.
2. Near-Term Technical Risk Has Become Unattractive
There are occasions when a stock becomes so overbought or extended that its near-term risk-and-reward profile no longer makes sense.
That is different from deciding a stock “feels expensive” simply because it has risen. Evaluating an extended position requires a disciplined process, including the study of price behavior, trend, momentum, and the risks surrounding the company and portfolio.
3. The Position Has Become Too Large
This may be the best problem an investor can have: the stock worked too well.
If appreciation causes one holding to become an uncomfortably large share of a client’s portfolio, we may trim it. That does not mean abandoning the investment or declaring that the stock has peaked. It means managing the risk created by its success.
There is an important distinction between trimming a winner and selling a winner. If we believe a company still has years of growth ahead, we may prefer to reduce an oversized position and continue participating rather than exit a strong business completely.
Let the Flowers Grow
Investing has a strange way of making the wrong decision feel prudent.
- Taking a quick profit can feel responsible.
- Holding a stock that has already doubled can feel greedy.
- Keeping a losing investment until it “gets back to even” can feel patient.
But the market does not care about our purchase price. That price is history. What matters is what we believe the business is worth today—and, more importantly, what it may be worth tomorrow.
Peter Lynch built one of the greatest investing records of all time and still looked back wishing he had given some winners more time. That is worth remembering.
There will always be reasons to sell: economic uncertainty, political developments, geopolitical conflict, or uncomfortable market volatility. Sometimes those developments will matter enormously. Often they will not.
Our job is not to eliminate uncertainty. That is impossible. Our job is to recognize when the fundamental story has changed, manage risk when necessary, and otherwise give great companies enough time to do what great companies tend to do:
Grow.
Occasionally, the hardest thing to do with a great investment is nothing at all.
Want to discuss how this framework could relate to your broader investment strategy? Schedule an introductory conversation with RollingWave Capital.
Important disclosures: This material is provided for informational and educational purposes only and should not be considered investment advice or a recommendation to buy or sell any security. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Any opinions expressed are those of RollingWave Capital as of the date of publication and are subject to change. References to specific securities are for illustrative purposes only and should not be considered a recommendation. Individual investment decisions should be based on each investor’s specific objectives, financial situation, risk tolerance, and needs.
RollingWave Capital and/or its clients may hold positions in securities referenced herein.